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Haiti - Economy : Poor performance of the Haitian economy in 2018
26/12/2018 16:07:20

Haiti - Economy : Poor performance of the Haitian economy in 2018
The last Economic Report of the Year of the Economic Commission for Latin America and the Caribbean (ECLAC) released last week, reveals that macroeconomic performance in 2018 for Haiti has been modest and below expectations (October 2017 period) to September 2018). The ECLAC estimates the growth of Haiti's Gross Domestic Product (GDP) at only 1.4% (1.2% in 2017), the persistence of an inflationary dynamic of 14.6% (15.4% in 2017), a large public deficit of 6.5% of GDP (3.9% in 2017), as well as an increase in the current account deficit of 3.5% of GDP (2.9% in 2017), added to a strong depreciation of the gourd.

The program signed in February 2018 with the International Monetary Fund (IMF) https://www.haitilibre.com/en/news-23659-haiti-economy-moise-accepts-the-program-of-control-and-the-requirements-of-the-imf.html is no longer valid [loss of significant budget support] due to non-compliance with quantitative criteria (including the public sector deficit and the level of reserves), as well as reforms in the electricity and energy sector, the reduction of fuel subsidies which entails considerable expenditures for the Treasury, averaging more than $ 200 million a year.

In 2018, the central government's tax burden (12.7% of GDP) decreased slightly compared to the previous year (13.6% of GDP). The total tax collection decreased in real terms by -4%, due to the reduction of direct (-5%) and indirect revenues (-11%) and the contraction of customs revenue (-8%). Total central government expenditure increased by 17.7% in real terms, following a positive change in current expenditure (17%), including subsidies (37%), but also public investment (26%). %). It should be noted that for the first time in the last five years, these investments were intended for programs and projects of infrastructure and agricultural work.

The overall central government deficit (6.5% of GDP) was largely financed by net contributions from the Central Bank (BRH) [more than 26 billion Gourdes https://www.haitilibre.com/en/news-26037-haiti-economy-the-budget-deficit-2017-2018-a-sinkhole-close-to-26-billion.html ], which reached record figures (4% of GDP), despite the agreement management of cash, consisting of the alignment of public expenditures according to disposable income, subscribed between the Ministry of Economy and the BRH in September 2017.

Haiti's external public debt posted an overall balance of 2.1 billion dollars (22 percent of GDP), with a slight increase of 0.2 percent in 2018.

The monetary policy of 2018 has adopted a cautious attitude, focused on two main objectives: to reduce inflation and to mitigate the depreciation of the Gourde against the dollar. BRH maintained the benchmark interest rate at 12%. Although the average exchange rate (65.42 gourdes per dollar) in 2018 is similar to that of 2017, a nominal exchange rate depreciation process (11.6%) accelerated from March, given the stricter measures on dollar-denominated transactions (which were canceled in October) and speculation about a shortage of dollars in the economy. BRH's net dollar sales were $82 million (twice the amount of 2017), resulting in a loss of nearly $150 million in net international reserves of $775 million at the end of September ($924 million in 2017).

The current account deficit accounted for 3.5% of GDP (2.9% in 2017), driven by the trade deficit and partially offset by the flow of remittances from the diaspora. Imports of goods increased by 26% compared to a 9% change in exports. The trade deficit of $ 3.5 billion, up 32% from 2017, is due to the rise in international oil prices (+ 33%) and, to a lesser extent, other commodities and food products. The level of exports has been maintained thanks to the export results of garment factories which account for 75% of the total value of exports and agricultural products.

In December 2018, inflation was expected to be 15.3% year-on-year (14.5% in November https://www.haitilibre.com/en/news-26485-haiti-economy-consumer-price-index-+15-in-november.html ) whose upward trend was mainly related to imported products, through the transmission of the depreciation of the exchange rate.

Moreover, at the level of the Greater Region (Caribbean and Latin America), ECLAC expects the Dominican Republic to close the year 2018 with a growth rate of 6.3%, the highest rate of growth. in the region followed by Antigua and Barbuda (5.3%), Grenada (5.2%), Bolivia (4.4%), Panama (4.2%), Paraguay (4.2%), Chile (3.9%), Peru (3.8%), Honduras (3.7%), Guyana (3.4%), Saint Vincent and the Grenadines (3.2%) and Costa Rica ( 3%), Mexico (2.2%), Uruguay (1.9%), Suriname (1.9%), Trinidad and Tobago (1.9%), Jamaica (1.5%), Haiti (1, 4%), Brazil (1.3%), Cuba (1.1%) and Ecuador (1%). On the other hand, Venezuela will end the year with a -15% decline in GDP, Dominica (-4.4%) and Argentina (-2.6%).

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